Fighting fraud in retail banking: a business case

The growing problem of fraud, being experienced by all lending organisations, is proving to be a significant challenge. As fraud methodologies change and the scale of the problem increases, organisations are implementing systems and processes designed to tackle different types of fraud.

Our client, a major European bank with millions of customers across multiple countries, was using a range of fraud prevention measures across its many divisions, which were proving successful with the incidence of fraud at the bank growing significantly less than the average across the industry. However, the bank recognised that the implementation of a standardised approach to fraud prevention would allow them to achieve additional value ensuring consistency, reducing operational overheads and enabling a cutting-edge approach.

Before the project started, the different lines of business had implemented systems and process individually, creating a silo approach. One key weakness was in data sharing as each division did not have a simple way to share its fraud data with the rest of the group.

The bank decided to centralise all the fraud risk policies and operations, integrating multiple systems and sources of data onto a single platform that could be used for all lines of business, products and millions of customers. The bank selected Hunter the decision analytics system from Experian to be fully integrated with the risk management infrastructure Using advanced technology, the system works by checking new applications against previous applications, suspect information and external value-added databases in order to identify potentially fraudulent applications. It also highlights where the applicant may be hiding previous and multiple applications and adverse information from their application.

"The overall result was the achievement of an ROI of over 1000% and exceeding expected fraud savings by more than 50% over the first year of operation..."

The Hunter system screens over 15,000 applications per day from all the different lines of business, both in online processes and in batch, and across multiple products and services. The bank now has a single platform, integrated with the application process and one central specialist team dedicated to fraud prevention, increasing effectiveness and reducing training and operational costs.

The system provides a central database which stores all applications and previous matches, so any fraudulent activity detected is now automatically available for searching to the whole business. It also accesses external data sources including credit bureau, fraud lists and reference files.

The fraud prevention system also provides detailed management information to manage work queues, set priorities for cases and gives the fraud team control over policies and strategies which are then deployed consistently across the organisation. This information enables the fraud team to continually improve the quality and accuracy of fraud detection and optimise resource utilisation.

If fraud prevention is at the heart of the overall risk management strategy, the rewards can be significant. The key to success is leveraging consulting expertise to reduce the time to market, implementing best practice, while minimising the impact on the internal fraud and IT resources.

The overall result was the achievement of an ROI of over 1000% and exceeding expected fraud savings by more than 50% over the first year of operation.

Read more in ''Global Hunter scoring - applying analytics to a rules-based system''

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